BANK RECONCILIATION. Make supplementary entries in the cash receipts journal and the cash payments journal.

Transcription

1 BANK ECONCILIATION SPECIFIC OUTCOMES _ Compare entries in the bank statement with entries in the cash receipts journal, cash payments journal and the bank reconciliation statement of the previous month. Make supplementary entries in the cash receipts journal and the cash payments journal. Prepare a bank reconciliation statement. 1. FOMAT BANK ECONCILIATION STATEMENT OF MBEKI STOES ON 30 NOVEMBE 2011 Dr Cr Debit/Credit balance as per bank statement Overdrawn Favourable Credit deposits not yet credited by bank xx Debit cheques drawn but not yet presented for payment: No. 100 No. 200 Debit amount incorrectly credited xx xx xx Credit amount incorrectly debited xx Debit/Credit balance as per bank account Favourable Overdrawn xxx xxx ACTIVITY 1 The information below was taken from the records of Tshabalala Traders. INSTUCTION 2. Compare the bank statement for July 2011 with the bank reconciliation statement of June 20.1 and the cash journals for July Make the additional entries in both journals and close them off. 2. Post to the bank account and balance the account on 31 July 2011

2 3. Prepare the bank reconciliation statement on 31 July 2011 BANK ECONCILIATION STATEMENT ON 30 JUNE 2011 D C Credit balance according to bank statement Credit outstanding deposit Debit cheques not yet presented for payment: No No No Debit balance according to bank account TSHABALALA TADES Cash receipts journal - July 2011 Sundry accounts Doc no Day Details Fol Analysis of receipts Bank Debtors control Discount allowed Sales Amount Fol Details K. Kgoba M. Mokoe Sales S. Spuru A. Ayitey Sales J. Jali M. Malule Sales Sales T. Thenga Sales

3 Cash payment journal Sundry accounts Doc no Day Name of Payee Fol Bank Trading stock Creditors control Discount received Amount Fol Detials Telkom Telephone AB Traders Stationery EF Traders Cash Wages H Printers Advertising JK Traders MN Ltd W. Mandela Salaries XY epairs epairs STA BANK BANK STATEMENT OF TSHABALALA - JULY 2011 Day Description Balance 1 Balance brought forward Credit Cheque Credit Cheque Cheque Service fees City Treasurer Cheque Cheque Credit Credit Unpaid cheque Tax levy on debit transactions Cheque

4 12 Top Insurers Cheque Credit Cheque book Cheque Cheque Credit Cheque Interest Notes 1. The unpaid cheque was received from M. Makoe on 2 July The correct amount of cheque no. 235 is On 8 July 2011 Penpoint Stationers deposited their rent directly in the bank account of Tshabalala Traders. 4. The payment to the City Treasurer was a debit order for water and electricity. 5. The payment to Top Insurers was a stop order for the insurance premium. 6. The accountant neglected to enter cheque 229 drawn by the owner, N. Nkosi, to pay his sons= rent.

5 E/04 ACTIVITY 1 ANSWE SHEET TSHABALALA TADES Cash receipts journal Sundry accounts Doc no Day Details Fol Analysis of receipts Bank Debtors control Discount allowed Sales Amount Fol Details 31 Totals W. Mandela (cheque 235) Penpoint Stationers Star Bank Cash payment journal Sundry accounts Doc no Day Name of Payee Fol Bank Trading stock Creditors control Discount received Amount Fol Details 31 Totals M. Makoe (cheque /D) City Treasurer Top Insurers N. Nkosi Star Bank GENEAL LEDGE OF TSHABALALA TADES Dr Bank Cr Jul 1 Balance b/d Jul 31 Total payments CPJ

6 31 Total receipts CJ Balance c/d Aug 1 Balance b/d BANK ECONCILIATION STATEMENT ON 31 JULY 2011 Credit balance according to bank statement Credit outstanding deposits Debit outstanding deposits No. No. No. Debit balance according to bank account Dr Cr ACTIVITY 2 The given information was taken form the books of Thabo Traders INSTUCTION 1. Complete the cash receipts journal and the cash payments journal for March Prepare the bank reconciliation statement on 31 March 2012 INFOMATION A. Information from the bank reconciliation statement for February 2012, received from SA Bank: Favourable balance according to the bank statement Outstanding deposits Outstanding cheques No No No

7 No Credit amount wrongly debited Favourable balance according to the bank account B. Sub-totals of the analysis cash journals on 31 March 2012 eceipts: Payments: Bank Bank Sales Trading stock Cost of sales Stationery Debtors control Debtors control 450 Discount allowed 650 Creditors control Sundry accounts? Discount received Sundry accounts? C. After comparing the bank reconciliation statement of February with the cash journals and bank reconciliation statement for March 2012, the following was noted: 1. The outstanding deposit appeared in the bank statement for March Cheque no. 240 was issued on 1 September 2011 to Mandela Children Fund as a donation. 3. The error was corrected by the bank. 4. Cheques no. 632 and 633 appeared on the bank statement for March Cheque no. 658 for 136 is correct according to the bank statement and was wrongly recorded in the cash payments journal as 226. It was issued to SNA Stationers for stationery bought. 6. The following entries appeared only on the bank statement: 6.1 A deposit of by our tenant LA Jeans. 6.2 A debit order for representing the part payment on the mortgage loan to Pepe Investments. 6.3 Service fees 73 Levy 12 Cash deposit fee 15

8 Interest on credit balance Commission on credit card sales An unpaid cheque, 250, was received from M. Mokoena in settlement of his account of 320, was dishonoured because of insufficient funds.

9 8. According to the analysis cash book the outstanding deposit amounts to It does not appear on the bank statement for March The following entries did not appear on the bank statement for March: Cheque No (dated 28 March 2012) Cheque No (dated 30 March 2012) Cheque No (dated 5 April 2012) 10. Cheque no. 660, 2 100, issued to PE Promotions for advertising was lost. Payment of the cheque was stopped and the cheque was replaced with cheque no. 668 on 31 March A cheque received from C. Cele, a debtor, for 600 was post dated to 10 April The bank had incorrectly recorded a deposit made by the owner, T. Thabo, into his personal bank account, in the business= account, A dishonoured cheque of S. Sorry, a debtor, was received together with the bank statement. This cheque, 650, was received as payment for a cash sale and was deposited on 12 March The reason for the dishonouring was that a second signature was required. 14. The bank statement for March 2012 was received on 31 March 2012 and showed an unfavourable balance of

10 ACTIVITY 2 ANSWE SHEET Cash receipts journal of Thabo Traders for March 2012 Sundry accounts Doc no Date Details Fol Analysis of receipts Bank Sales Cost of sales Debtors control Discount allowed Amount Fol Details 29 Totals b/d 31 Mandela Children Fund (cheque cancelled) SNA Stationers (cheque 658 corrected) LA Jeans SA Bank PE Promotions (cheque 660 cancelled)

11 Cash payment journal of Thabo Traders for March 2012 Sundry accounts Doc no Date Details Fol Bank Trading stock Stationery Debtors control Creditors control Discount received Amount Fol Details 29 Totals b/d 31 Pepe Investments SA Bank M. Mokoena (/D insufficient funds) PE Promotions S. Sorry (/D signature)

12 GENAL LEDGE OF THABO TADES Dr Bank B Cr Mar 1 Balance b/d Mar 31 Total payments CPJ 31 Total receipts CJ Balance c/d Apr 1 Balance b/d BANK ECONCILIATION STATEMENT OF THABO TADES FO MACH 2012 Dr Cr Debit balance according to bank statement Credit outstanding deposits Debit outstanding cheques No. No. No. No. No. Debit amount wrongly credited Debit balance according to bank account

13 ACTIVITY 3 INSTUCTION Use the given information to do the following in the books of Atlantis Stores: 2.1 Complete the bank account in the general ledger by making any entries that you may seem necessary directly in the bank account. Your entry must show the correct contra account. Balance the account. 2.2 Prepare the bank reconciliation statement on 31 August 2011 Atlantis Stores compared their bank statement, received from GAAP Bank, for August with the cash journals for August and found the following differences: 1. The bank account in the general ledger had a favourable balance of 700 on August The bank statement had a debit balance of on the same date. 2. The following cheques posted to the relevant creditors during July 20.1 and not posted, appear on the bank statement: No 497 for for for M Haze's cheque for 600 which was deposited on 10 August 2011, was returned marked /D. No entry has been made for this returned cheque. 4. A deposit of on 31 August 2011 does not appear on the bank statement. 5. A deposit of was entered in the cash receipts journal as It had been received for sales. 6. Debtor A. Jacobs paid his cheque for in settlement of his debt of directly into the bank account at Atlantis Stores. 7. The annual insurance premium of was paid by the bank by means of a debit order. 8. The following cheques have not been presented for payment to the bank: No (dated 10 February 2011 and issued to Judo Club as a donation) (dated 10 August 2011) (dated 28 August 2011) 9. Service fees, 48, cash handling fee, 32 and interest on overdraft, 60 appear on the bank statement. 10. Cheque no 540 issued for 60, appears on the bank statement as A cheque in payment of purchases of (cheque 538) was entered in the cash payments journals a A deposit of was cast in the deposit book as 4 190, but the bank showed the correct amount on the bank statement on 24 August 2011.

14 ACTIVITY 3 ANSWE SHEET GENEAL LEDGE OF ATLANTIS STOES Dr Bank Cr Aug 31 Balance b/d Aug 31 Debtors control Debtors control Sales Donation Insurance Deposit Bank charges Balance c/d Interest on overdraft Trading stock Sept 1 Balance b/d BANK ECONCILIATION STATEMENT OF ATLANTIS STOES ON 31 AUGUST 2011 balance according to bank statement outstanding deposit outstanding cheques correction of error on balance according to bank account Debit Credit

15 ACTIVITY 4 The following items appeared in the Bank reconciliation statement of Ndi-Ndo Stores at their year end, 30 June 2014: Debit balance as per Bank statement Deposit not credited by the bank Outstanding cheques No. 515 (dated 15 December 2013) 500 No. 891 (dated 9 April 2014) 240 No. 945 (dated 20 July 2014) No. 946 (dated 30 June 2014) 493 Incorrect credit on Bank statement Balance as per Bank account? INSTUCTION Answer the following questions: 1. Prepare a correct Bank reconciliation statement at 30 June One of the listed cheques not presented to the bank has been treated incorrectly. Which cheque is it, give a reason for your choice and explain the correct course of action. 3. Does Ndi-Ndu Stores have a favourable bank balance or an overdraft according to the bank s records? Give the amount and a reason for your answer. 4. A cheque received by Ndi-Ndu Stores on 25 June 2014 but dated 14 August 2014, does not appear in the Bank reconciliation statement. Give an explanation. 5. Explain how cheque no. 945 should be treated when preparing the financial statements. 6. What action would Ndi-Ndu Stores take if a cheque issued by another business, appears on their Bank statement? 7. Explain why cheque no. 945 is not treated in the same way as cheque no. 946 when preparing the financial statements. 8. What would the procedure be if cheque no. 891 does not appear on the Bank statement for July 2014? 9. Give two possible reasons for a dishonoured cheque received by Ndi-Ndu Stores.

16 10. Give an explanation why the stop orders of a business do not appear in their Bank reconciliation statement. ACTIVITY 4 ANSWE SHEET 1. BANK ECONCILIATION STATEMENT OF NDI-NDU STOES ON 30 JUNE 2014 Debit Credit Debit balance according to Bank statement Credit outstanding deposits Debit outstanding cheques No. No. No. No. Debit incorrect entry on Bank statement Credit balance according to bank account

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19 BANK ECONCILIATION ACTIVITY 1 SOLUTION TSHABALALA TADES Cash receipts journal Sundry accounts Doc no Day Details Fol Analysis of receipts Bank Debtors control Discount allowed Sales Amount Fol Details 31 Totals B/S B/S W. Mandela (cheque 235) Penpoint Stationers Salaries ent income B/S Star Bank Interest received on current account Cash payments journal Sundry accounts Doc no Day Name of payee Fol Bank Trading stock Payments Discount received Amount Fol Details 31 Totals B/S M. Makoe (Cheque /D) Debtors control B/S City Treasurer Water and electricity B/S Top Insurers Insurance 229 N. Nkosi Drawings B/S Star Bank Bank charges E/17

20 GENEAL LEDGE OF TSHABALALA TADES Dr Bank B Cr Jul 1 Balance b/d Jul 31 Total payments Total receipts Balance c/d Aug 1 Balance b/d BANK ECONCILIATION STATEMENT ON 31 JULY 2011 Dr Cr Credit balance according to bank statement Credit outstanding deposits Debit outstanding cheques No No No Debit balance according to bank account

21 ACTIVITY 2 SOLUTION Cash receipts journal of Thabo Traders for March 2012 Sundry accounts Doc no Date Details Fol Analysis of receipts Bank Sales Cost of sales Debtors control Discount allowed Amount Fol Details 29 Totals b/d Mandela Children Fund (cheque cancelled) SNA Stationers (cheque 658 corrected) Donations Stationery B/S LA Jeans ent income B/S SA Bank Interest on current account PE Promotions (cheque 660 cancelled) Advertising

22 Cash payments journal of Thabo Traders for March 2012 Sundry accounts Doc no Date Details Fol Bank Trading stock Stationery Debtors control Creditors control Discount received Amount Fol Details 29 Totals b/d B/S 31 Pepe Investments Mortgage loan B/S SA Bank Bank charges M. Mokoena (/D insufficient funds ) PE Promotions Advertising S. Sorry (/D signature)

23 GENEAL LEDGE OF THABO TADES Dr Bank B Cr Mar 1 Balance b/d Mar 31 Total payments CPJ Total receipts CJ Balance c/d Apr 1 Balance b/d BANK ECONCILIATION STATEMENT OF THABO TADES FO MACH 2012 Dr Cr Debit balance according to bank statement Credit outstanding deposits Debit outstanding cheques No No No No No Debit amount wrongly credited 800 Debit balance according to bank account

24 ACTIVITY 3 SOLUTION GENEAL LEDGE OF ATLANTIS STOES Dr Bank Cr Aug 1 Balance b/d 700 Aug 31 Debtors control 600 Debtors control (M Haze cheque /D) (A. Jacobs) Sales 720 Donation 640 (correction of error) (cheque cancelled) Insurance Deposit 100 Bank charges 80 (correction of error) Interest on overdraft 60 Balance c/d Trading stock 540 (correction of cheque 538) Sept 1 Balance b/d BANK ECONCILIATION STATEMENT OF ATLANTIS STOES ON 31 AUGUST 2011 Debit Credit Debit balance according to bank statement Credit outstanding deposit Debit outstanding cheques: No Debit correction of error on cheque Credit balance according to bank account

25 ACTIVITY 4 SOLUTION 1. BANK ECONCILIATION STATEMENT OF NDI-NDU STOES ON 30 JUNE 2014 Debit Credit Debit balance according to Bank statement Credit outstanding deposits Debit outstanding cheques No No No Debit incorrect entry on Bank statement Credit balance according to bank account Cheque 515. The cheque is stale (older than 6 months) and must be cancelled by means of an entry on 16 June 2014 in the CJ. 3. Overdraft of A debit balance according to the bank statement means an overdraft. 4. The cheque received on 25 June 2014 is a post-dated cheque and should be kept in a safe place. The receipt will only be issued on 14 August On that day the cheque will be receipted and thereafter recorded into the CJ. 5. All post-dated cheques must be shown in the balance sheet as creditors. The postdated cheque amounts will be added to the bank balance (or deducted from the bank overdraft) and creditors increased accordingly. 6. Show the amount as a credit on the bank reconciliation statement in anticipation of the correction by the bank. 7. The payee of cheque 945 may not present the cheque for payment before 14 August 20.4 (the next accounting period). The payee of cheque 946 may present the cheque for payment as from 30 June 2014 (the current accounting period). 8. The cheque has not been presented for payment yet and will have to be shown as an outstanding cheque in the bank reconciliation statement. 9. The payment of a cheque can be refused because of various reasons: - insufficient funds in the drawer's account - the signature of the drawer is queried or omitted - the amount in words and the amount in figures differ - the cheque is older than six months (stale) - the cheque is post-dated.

26 10. The entry in the CPJ is done after the stop order payment has appeared on the bank statement. The stop orders will not appear in the bank reconciliation statement.